The environmental audit committee’s interim report on fashion retailers’ ethical and environmental track records show the industry needs to make up a lot of ground.

MPs have criticised UK fashion businesses for failing to prioritise sustainability in their company policies, and have called on them to participate fully in industry initiatives to tackle social and environmental issues. The comments were published in an interim report on 31 January by the environmental audit committee as part of its wider inquiry into the sustainability of the fashion industry.

The inquiry launched in June 2018 to investigate the social and environmental impacts of the fast fashion business model, and the wider clothing industry. It asked 16 fashion retailers to submit evidence on areas such as their use of organic or sustainable cotton, limiting the discharge of hazardous chemicals and the re-use or recycling of unsold stock. It also explored claims of unfair labour practices in UK supplier factories.

It’s shocking to see that a group of major retailers are failing to take action to promote environmental sustainability and protect their workers

Mary Creagh, chair of the environmental audit committee

MPs assessed businesses according to their levels of participation in a range of programmes in place, and concluded that “retailers should show leadership through engagement with industry initiatives” and that the “current business model for [the] UK fashion industry is unsustainable”.

They favoured involvement in the Sustainable Clothing Action Plan (SCAP) and the Microfibre Initiative as marks of environmental leadership, and membership of organisations such as the Ethical Trading Initiative (ETI) and ACT for the labour market. The committee said it was “impressed with the level of engagement by some retailers” but found several are lagging behind.

Committee chair Mary Creagh said: “It’s shocking to see that a group of major retailers are failing to take action to promote environmental sustainability and protect their workers.”

At the other end of the scale, the committee found Asos, Burberry, Marks & Spencer, Tesco and Primark to be “engaged”, while Arcadia Group, Asda, Debenhams and Next are “moderately engaged” and “have the potential to go further”.

Retailers’ response

Those retailers considered “engaged” or “moderately engaged” broadly welcomed the findings.

A Debenhams spokeswoman said: “Industry membership is a great way to collaborate and effect real sustainable change on a larger scale.” Although it participates in some of the programmes detailed in the report, the retailer added: “There are other initiatives that were not included that support both social and environmental improvements, through collaboration with unions, NGOs and retailers.”

Some “less engaged” retailers said their sustainability policies and actions were not truly represented or their business models were misunderstood.

We continue to put energy and resource into reducing the environmental impact of our business

TK Maxx

In a statement to Drapers, TK Maxx said the report “does not reflect our commitment to working to make a positive, sustainable impact on the world in which we live”. The retailer said it has a complex business model as an off-price retailer and is not as vertically integrated as others in the report, adding: “We continue to put energy and resource into reducing the environmental impact of our business.” It cited the Carbon Trust Standard accreditation it has held since 2009 and its 14-year-old take-back scheme as examples of its efforts.

The report criticised JD Sports and Sports Direct for failing to be members of the Microfibre Consortium and for limited use of recycled materials.

JD Sports responded: “Around 90% of the group’s sales come from products supplied by third-party brands. Our two principal brands – Nike and Adidas – are internationally recognised as industry leaders in driving sustainability within the design and development of their product ranges. Private-label sales make up the rest of the group’s sales, and there is an ongoing project to review options on improving the sustainability of our manufactured garments.”

Labour issues

MPs’ biggest concerns focused on labour practices. Low wages in Leicester factories supplying etailers including Boohoo and Missguided surfaced as a key issue over the course of the inquiry. None of the “less engaged” group of retailers are signed up to the ACT living wage initiative and only Missguided is a member of the ETI.

Missguided agreed with the committee that “there are significant issues in Leicester with compliance to UK employment law and ensuring workers are paid the minimum wage”. The retailer has now stopped working with 60 factories in the area, and taken measures to ban cash payments and fund a whistleblowing helpline.

MPs criticised Boohoo for not joining the ETI.

In a statement to Drapers, Boohoo Group said: “Just because we are not a member of the ETI does not mean we do not audit our supply chain accordingly. We have a strong framework of practices and policies in place that meet or exceed industry initiatives. We appreciate that signing up to specific industry initiatives demonstrates commitment, and are open to revisiting our stance on membership of those flagged in the report.”

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When giving evidence to the committee back in November, Carol Kane, co-founder and joint CEO of Boohoo, attributed its reluctance to joining the initiative to the requirement to publish its information on its supply chain “which is currently our engine room”.

Furthermore, the need for transparency outweighs any retailer’s desire for supply chain secrecy, believes Mike Barry, director of sustainable business at Marks & Spencer – one of the “engaged” retailers. He told Drapers that concerns about the competitive advantage of not disclosing supplier names are increasingly unnecessary: “We also had those concerns around giving away trade secrets before disclosing our supplier details. But we realised that any competitor can find out where we source if they want to, so decided to push through and publish. First-tier disclosure is now the norm and retailers are starting to look out of step if they don’t do it.”

Retailers’ participation in sustainability and ethical schemes and actions

Jenny Holloway, CEO of London manufacturer Fashion Enter, also advocates transparency: “With the Home Office announcing it will name and shame suppliers who are not paying decent rates, now is the time for buyers to look at their supply base. Being transparent about who you work with is part of that.”

Sustainability leaders

MPs considered Asos, Marks & Spencer, Primark, Tesco and Burberry as industry leaders. Their goals include: M&S’s aim for 80% of materials to come from sustainable sources by 2025; Primark’s plan to source all cotton sustainably; Asos’s commitment to sustainably source 100% of its raw materials by 2025, with an interim goal of 60% by 2020; Tesco’s aim to use only sustainable cotton by 2019 and only recycled polyester by 2030; and Burberry’s 2022 goal for 100% Better Cotton Initiative cotton.

On labour market initiatives, MPs singled out Tesco for the work it is doing via its 40-strong team of in-house human rights experts who work closely with all its non-food factories across Asia to ensure decent standards. They also praised Asos’s involvement in Fast Forward – a traceability system to show every single worker involved in the garment.

Drapers contacted all 16 retailers in the report. Amazon and Next declined to comment. Kurt Geiger, Sports Direct, Arcadia and Asda did not respond.

The Drapers Verdict

The “engaged” UK fashion retailers are leading the way on how the industry as a whole can tackle and solve the issues around labour and the environment. Given the global nature of the sector, many believe the next step should be industry-wide and global collaboration.

Individual initiatives such as the Ethical Training Initiative and the Better Cotton Initiative show what success can look like. However, the industry now needs to find a way to collaborate on a broader scale and organise itself for more widespread change. It could follow the lead of the food sector, where competitors are working together to tackle plastic pollution, food waste and deforestation.

The environmental audit committee will publish a full report in the coming weeks, which will include policy recommendations. Greater collaboration could help to spread the burden and cost of change, and help the sector avoid almost inevitable legislation on labour and environmental issues.

A call for compulsory take-back schemes

Nine out of the 12 retailers with physical stores covered in the environmental sudit committee interim report have in-store take-back schemes or textile banks, an initiative regarded as an important sustainability action.

Next was the only retailer among those considered “moderately engaged” and ”engaged” not to run such a scheme, citing cost as a barrier.

In its evidence to MPs, Primark suggested take-back schemes should be made compulsory, partly to overcome the perception of “fast fashion” as disposable. In 2016 the retailer launched a customer take-back pilot in five stores in the UK and Germany. It has confirmed it will scale this up and launch an in-store customer recycling scheme this year.

Marks & Spencer launched its Schwopping recycling scheme in 2008. Over the past 10 years it has collected 30 million garments.

TK Maxx has operated its Give Up Clothes for Good take-back scheme for 14 years, recycling 6,830 tonnes of clothing and saving 150,000 tonnes of carbon emissions, DEFRA has estimated. Through the scheme the retailer has raised more than £31m for Cancer Research UK Kids and Teens.

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